DSE’s sorry state keeps going with dire liquidity crunch

The Dhaka Stock Exchange (DSE), the country’s premier bourse, is facing a dire liquidity crunch as the participation of active investors dropped awfully amidst the country’s macroeconomic hardships.

The DSE turnover yesterday stood at Tk 272 crore, the lowest since July 16, 2020.

The prime bourse recorded a turnover of Tk 267 crore on July 15 of 2020.

Yesterday’s turnover was 21.1 per cent lower than the tally of Tk 345 crore in the previous session.

Earlier on Sunday, the Dhaka bourse’s turnover dipped to a 20-month low of Tk 313 crore.

The market, according to analysts, was failing to lure new investors, while many of the existing investors were also pulling out their funds, forcing the market to hit the poorest turnover in nearly two and a half years.

Moreover, the majority of the issues sticking to their floor prices battered investors’ confidence enormously, making them reluctant to put fresh funds in new scrips.

Meanwhile, the alleged loan scams in the country’s banking sector published recently in the media cast a shadow over investors’ optimism, aided by the ongoing macroeconomic strains and apprehensions regarding the resurgence of political turbulence.

Market insiders and analysts blame the floor price system for the massive fall in the turnover because many scrips even with the sound fundamental base were still not being traded due to their staying at floor prices.

Out of the traded issues yesterday, 228 scrips, or 75 per cent were stuck at their floor price level.

The BSEC Chairman Professor Shibli Rubaiyat-ul-Islam, however, speaking at an event on Monday said they had no alternative but to introduce the floor price system to protect the interests of the small investors.

“We had been forced to launch the floor price policy to save the small investors’ interests following the massive global as well as domestic economic shocks created by the coronavirus pandemic and the Russia-Ukraine war,” he added.

The DSEX, the broad index of the Dhaka bourse, however, rose 16.5 points or 0.26 per cent to settle at 6,229 yesterday points against 6,213 points in the previous trading session.

Among other indices, the DS30, the blue-chip index, added 7 points or 0.31 per cent to close at 2,205, and the DSES, the Shariah-based index, gained 4.52 points or 0.33 per cent to finish the session at 1,364.

The market witnessed a see-saw trading until mid-session, followed by some buying behavior of bargain hunters, helping the core index stay afloat at the end of the session, said EBL Securities, a stockbroker, in its daily market review.

Investors’ eagerness to take long-term positions in equities, however, weakened due to concerns regarding the dismal financial performance forecasts of the majority of listed companies, it added.

Apart from that, most of the scrips being stuck at the floor price limited liquidation opportunities for investors, making them reluctant to inject fresh funds into equities, EBL Securities stated.

The IT sector topped the turnover chart with a contribution of 20.5 per cent to the total turnover, followed by pharma & chemicals (20.4 per cent) and food & allied (11.1 per cent) sectors.

Most of the sectors displayed positive returns at the DSE with the jute sector posting the highest gain of 2.2 per cent, followed by paper (1.6 per cent) and services (1.5 per cent).

Out of the 303 issues traded, 50 stocks advanced, 25 issues declined, and 315 scrips did not see any price movement on the DSE trading floor.

The port city bourse, Chittagong Stock Exchange (CSE), also closed higher yesterday with its two major indices – the selected indices (CSCX), and the all-share price index (CASPI), advancing 25.3 points and 41.8 points respectively.